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Trustees move Bombay HC against CCI challenging jurisdiction


The Trustees’ Association of India (TAI), an industry body of debenture trustees, has moved the Bombay High Court to challenge the jurisdiction of the competition watchdog over the regulation of fees the trustees charge bond issuers, people familiar with the matter told ET.

The division bench of Justice GS Patel and Justice Madhav Jamdar will likely hear the matter on Friday.

The industry body has now sought the court’s intervention to quash and set aside the investigation order passed by the Competition Commission of India (CCI) against its members including IDBI, SBI and Axis. The plea further argues that the Securities & Exchange Board of India (Sebi) is the specialised sectoral regulator to govern the activities of all the debenture trustees.

The genesis of the dispute lies in a complaint filed before the CCI by Muthoot Finance, a South-based gold loan company. The CCI had passed an order on December 23 last year directing the Director General (DG) to conduct an investigation against three firms – IDBI Trusteeship, SBICAP Trustee and Axis Trustee – and the industry body TAI for alleged ‘cartelisation’.

On August 28, 2021, Muthoot Finance had proposed to issue bonds worth Rs 982 crore and approached IDBI Trustee, the petitioner, for a fee quote for acting as its debenture trustee. A day later, it received the quote.

However, the NBFC raised concerns with IDBI Trustee due to the significant increase in the fee structure.

The pricing structure was devised considering the recent amendments by Sebi, which significantly increased the roles and responsibilities of DTs (Debenture Trustees), said IDBI Trustee, citing a bespoke pricing structure that came into effect from April 1 last year.

“Any deviations from the pricing structure will attract adverse repercussions,” it said.

Later, the DG investigation at the CCI had issued a notice to these trustee companies and the association to furnish certain information and to make representation to it.

“The impugned orders (CCI) and notice are ex-facie illegal, arbitrary, without jurisdiction and the authority of law and infringes the fundamental rights of the petitioner (TAI),” said the association in its petition.

“Instead of cooperating with Sebi on the investigation and awaiting the findings, Muthoot Finance filed a complaint with the CCI, thereby showing its malicious intent,” read the petition. Muthoot Finance could not be contacted immediately for comments.



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